Airline aims for radical transformation to reduce dependence on China-Taiwan traffic

Air Macau is considering radically changing its business model into a low-cost operation in a move that could include the purchase of a stake by Tony Ryan, the founder of Ryanair.

Although the airline declines to comment, industry sources close to Air Macau's 51% shareholder, China National Aviation (CNAC), say informal talks have been held with several parties interested in taking a stake in the carrier. Local media reports identify the most likely partner as Ryan, but he has not responded to requests for comment.

One of the airline's shareholders, Portugal's TAP, has been trying to sell its minority stake, held indirectly through another company.

Air Macau, which is based in the former Portuguese enclave of Macau, west of Hong Kong, started operating in 1995 when Macau's airport opened. The island, now a Special Administrative Region of China, is best known for gambling, although Air Macau profits most by carrying passengers between Taiwan and China via its home base. Non-stop flights between China and Taiwan are banned.

A source close to CNAC says the company has been considering changing the focus of full-service operator Air Macau, partly to reduce its dependence on China-Macau-Taiwan passenger and cargo traffic. It believes non-stop flights will eventually be allowed between Taiwan and China and most passengers will choose to bypass Macau.

"Transforming Air Macau has always been the objective [of CNAC]," says the source. "Macau may be the perfect place for an LCC [low-cost carrier], so that may be the solution."

Media reports say Ryan's family has been discussing the purchase of a stake through family investment vehicle Irlandia Investments since June.

Although low-cost carriers have yet to make the same impact in Asia as they have in Europe and North America, some major airlines such as Singapore Airlines and Thai Airways International are looking at establishing no-frills subsidiaries following the success of Malaysia's AirAsia, which is now expanding rapidly.

Source: Flight International